Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
Credit Markets, Credibility, and Economic Transformation
Journal of Economic Perspectives
vol. 5,
no. 4, Fall 1991
(pp. 139–148)
(Complimentary)
Abstract
This paper focuses on the special role that capital markets play in the transformation of centrally planned economies into well-functioning market economies. We demonstrate that underdeveloped credit markets inhibit the effectiveness of price reform, monetary and credit policies, and trade liberalization. We explore various ways to overcome the difficulties associated with the underdeveloped credit markets. In this regard, we examine the implications of "cleaning" the balance sheets of enterprises and banks from nonperforming loans, as well as ways to enhance credibility. The paper concludes with a brief discussion of sequencing of economic reform measures.Citation
Calvo, Guillermo A., and Jacob A. Frenkel. 1991. "Credit Markets, Credibility, and Economic Transformation." Journal of Economic Perspectives, 5 (4): 139–148. DOI: 10.1257/jep.5.4.139JEL Classification
- P21 Socialist Systems and Transitional Economies: Planning, Coordination, and Reform
- P34 Socialist Institutions and Their Transitions: Financial Economics
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